BCE Inc. (TSX:BCE)(NYSE:BCE) and Toronto-Dominion Bank (TSX:TD)(NYSE:TD) are two of Canada’s top dividend picks.

Let’s take a look at the outlook for both companies to see if one is a better bet right now.

BCE Inc.

BCE has worked hard over the past few years to widen its competitive moat.

Through a series of strategic acquisitions, the company has added sports, television, radio, retail, and advertising assets to the fold, and that means BCE now generates revenue all along the value chain.

When you combine the media holdings with the national wireless and wireline network infrastructure, you get a business that touches the lives of most Canadians on a regular basis.

In fact, any time a Canadian downloads a movie, sends a text, calls a friend, checks e-mail, listens to the weather report, watches the news, or catches a pro sports game in Toronto (other than baseball), the odds are pretty good that BCE’s shareholders are going to benefit.

That’s an attractive situation for investors, and one that looks set to continue for the long haul.

BCE has to invest billions in its network infrastructure to ensure it stays ahead of the curve, but the company still pays a juicy dividend. At the moment, the quarterly payout of $0.6825 per share yields 4.7%.

If you want a stock you can buy and forget about for a decade, BCE is a solid pick.


TD is an earnings and dividend juggernaut. The company reported Q1 2016 profits of $2.2 billion and just raised its payout by 8%. This is at a time when the banking industry is supposed to be facing economic headwinds.

TD’s success lies in the power of its retail banking franchise both here in Canada and south of the border. Every customer-facing TD staffer is constantly on the lookout for opportunities to offer a new product or service, and while some clients might find it a bit overwhelming at times, TD’s investors are all smiles.

Over the past decade TD has invested some serious cash to build its U.S. operations and is now considered a top-10 bank in the United States. The U.S. presence provides a great hedge against weakness in the Canadian economy, and shareholders currently enjoy a nice boost to earnings when the American profits are converted to U.S. dollars.

High housing prices and the rout in the oil patch have some investors concerned the big banks might be in for a nasty hit. TD’s oil and gas loans represent less than 1% of the total loan book, so there isn’t much to worry about on that front.

As for housing, TD’s Canadian mortgage portfolio is very large, but uninsured mortgages represent less than half of the loans and the loan-to-value ratio on that component is less than 60%. This means the housing market would have to fall significantly before TD would see a meaningful impact.

One thing to watch in the financial industry is the emergence of new entrants in the mobile banking space. As technology improves and consumers become more comfortable making transactions using wireless devices, the banks are going to have a battle on their hands. TD has the resources to fight the war, but changes are coming.

TD has paid a dividend since 1857. The current quarterly distribution of $0.55 per share yields 3.9%.

Which should you buy?

BCE and TD are both great stocks and deserve to be in any dividend portfolio. If you only have the cash to buy one, I would give the edge to BCE for the higher yield and the fact that it appears to be better protected against threats from new competition.

More top dividend stocks

These three top stocks have delivered dividends to shareholders for decades (and even centuries!). Check out our special FREE report: "3 Dividend Stocks to Buy and Hold Forever".


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Fool contributor Andrew Walker has no position in any stocks mentioned.